EU Commission

European Commission postpones 2021 e-commerce package

2021 VAT e-commerce package to be delayed by 6 months

Even as COVID-19 cases have slowed in Europe, its impact continues to have ripple effects across every aspect of life and business, including tax legislation. The European Commission has proposed the implementation of the 2021 VAT e-commerce package be delayed by 6 months due to the pandemic. Originally set to begin 1 January 2021, the EU Commission proposes extending it until 1 July 2021 to give the Member States more time to prepare for the changes.

One-Stop Shop to be expanded

Under the new VAT measures, there will be an expansion of the One-Stop Shop (OSS), which is good news for online businesses selling consumer products across the EU. The expansion will allow online businesses to report all sales across Europe in a single, consolidated VAT return submitted in the company’s country of establishment, significantly streamlining VAT reporting. Under the new rules, online sellers will no longer need to have multiple VAT registrations as all foreign sales will be reported in the OSS return. In addition, individual Member State distance selling thresholds will be abolished and replaced by a new €10,000 EU wide threshold.

At present, Member States are facing so many challenges with COVID-19, that many don’t feel they have enough time to implement the changes by January 2021.

We’ll continue to keep you posted on the extension. In the meantime, EU business selling consumer products online to customers in another EU country should follow the currently established distance sales regime (VAT registration in the country of the customer when the threshold is exceeded).

For a full listing of global VAT implications regarding COVID-19, read our dedicated live blog.

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